4
ANNUAL REPORT 2015/2016
BUSINESS REVIEW
A COMPETITIVE LANDSCAPE
The year has seen oil prices remain depressed and there
is growing realization that recovery while a certainty
is not imminent. Physical demand for fossil fuels
has remained steadily growing and inelastic despite
price movements but supply only started to recede in
mid-2015 with storage demand still strong globally.
Middle Eastern and Russian production has remained
consistent with Iran poised to recover some lost market
share while shale output continues to fall. International
oil companies have continued to make significant cuts
to capital expenditure into 2016 and beyond. The bulk
of these cuts will be felt this year. Within Australia,
mega projects like Gorgon and Ichthys are starting the
process of adding LNG supply to the global marketplace
but projects on the drawing board like Browse have
been delayed and will remain on the backburner till the
supply situation improves.
Another theme prevalent in our industry is that of
consolidation. We have seen Shell completed the
acquisition of BG Group in February and Schlumberger
completing its merger with Cameron in April 2016.
Technip and FMC have announced their intention
to merge. Such consolidation within every segment
GROUP CEO’S
STATEMENT
May
2016
May
2000
May
2005
May
2010
160 -
140 -
120 -
100 -
80 -
60 -
40 -
20 -
0 -
Crude Oil Price (USD/bbl)
CRUDE OIL PRICE
Kuah Boon Wee
Group Chief Executive Officer
“Inthemeantime,ourbusinesseswill
focus on the opportunities available,
raising utilization, developing new
capabilites, preserving cash....”
